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The Good Neighbor Economy: Why Walzonomics Works [1]

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Date: 2024-08-28  

“That family down the road, they may not think like you do, they may not pray like you do, they may not love like you do – but they’re your neighbors, and you look out for them, and they look out for you.” Tim Walz’s impassioned DNC speech obliterated the false dichotomy between doing good and doing well. His ‘good neighbor economy’ has Minnesota ranked among the very best states to live in (#4) and do business in (#6). This is no coincidence: investments in society benefit the economy and vice versa.

In program after program, Minnesota demonstrates why Walzonomics works. Their nation-leading child tax credit could lower child poverty by a third, encourage workforce participation (particularly among single mothers), and improve the long-term health, education, and lifetime earnings of the family (see Danziger & Haveman’s Understanding Poverty). Similarly, Minnesota’s North Star Promise Scholarship will increase the number of college graduates, nearly doubling their average career earnings and preparing them for next-generation jobs. Some such jobs will be catalyzed by Minnesota’s clean energy law that requires their electrical grid to be 100% renewable by 2040. In health care, the Protect Reproductive Options Act will lower maternal mortality, thereby strengthening families. And Minnesota’s $1 billion investment in affordable housing will lower costs and housing insecurity. All of these laws represent investments in society – neighbors looking out for neighbors. They are broadly effective (see Peter Lindert’s Growing Public) and broadly popular.

In contrast, the other side offers “an agenda no one asked for…that serves nobody except the richest and the most extreme.” Pollution has killed over 9 million people a year, created record-high insurance losses (and premiums), and threatens to render the planet uninhabitable; and yet their nominee offered to deregulate polluters in exchange for donations. He may “love the poorly educated,” but his party’s assault on books, education, and critical thinking hurts the economy and allows foolishness to trump facts (see below). The Project 2025 proposed nationwide abortion ban would make women think long and hard about risking their lives by getting pregnant. And another tax cut for the rich would again exacerbate the federal deficit and inequality, thereby fomenting extremism and undermining democracy (see Jonathan Ostry’s Confronting Inequality, p. 6). All of these policies – expanding pollution, attacking education, forcing women to give birth, taking from the poor to give to the rich – are bad for society and bad for the economy.

Generation after generation, history demonstrates which set of policies is better. Under Biden & Obama, American gained 26 million jobs; under Bush Jr. & Trump, we lost 2 million. Under Clinton & Carter, we gained 34 million jobs; under Reagan & Bush Sr., we gained 18 million. In fact, since World War II, the economy has grown 50% faster under Democratic presidents than Republican (Blinder & Watson 2016). Three quarters of a century is not a coincidence. Good Neighbor policies pay off. We do well when we do good.

How is this not understood? We know investments in society create a positive network effect: improving our neighbors’ outcomes improves our own. We know humans believe in reciprocity (see Eric Beinhocker’s The Origin of Wealth); we naturally help neighbors in need and punish cheaters and thieves – as presidential nominee Kamala Harris said, “In our system of justice, a harm against any one of us is a harm against all of us.” We know capitalism is fundamentally a non-zero-sum game (see Robert Wright’s Nonzero); our whole society is based on the mathematical certainty that when people work together, they achieve more. Adam Smith (The Theory of Moral Sentiments) would argue that compassionate capitalism isn’t the best kind, it’s the only kind. Take that as axiomatic; or forget mathematics and economics – it’s simple common sense that people are more productive when they are not suffering. As presidential nominee Kamala Harris so adroitly put it: “none of us has to fail for all of us to succeed.”

Unfortunately, we also know that this nation does not analyze facts and historical data as if they fell from a coconut tree. The politics of lies, fear, and division is strong – that is why popular opinion, pundits, and paid shills have been wrong again, and again, and again. This national divorce from reality is the only way a convicted felon, rapist, and insurrectionist (see Liz Cheney’s Oath and Honor) could be actually polling competitively. But coming up fast is the proven success and sheer joy of Kamala Harris and Tim Walz. Their Good Neighbor policy-making has been and will be good for society and good for the soul. America is not beaten yet. And when we fight –

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